IN THE FRANCHISING WORLD, the Philippines stands out because it was one of the first countries in Asia to embrace the concept.
And decades after American companies introduced their business expansion system to the Philippines, the franchising sector continues to thrive.
In an e-mail interview with Business Friday, Philippine Franchising Association president Yvette Pardo-Orbeta, who also heads Wendy?s Philippines, shares how the sector performed last year and why there are many reasons to be bullish in 2010.

Q: How did the franchising industry perform last year?
A: Because of the global financial crisis, the franchise sector got off to a slow start because of cautious consumer outlook. But as the months rolled by and seeing that the Philippines was fairly insulated by the global financial crisis, consumer confidence began to improve, which made the Philippine franchising sector perform better than expected. In fact, some of our members even went ahead with their respective expansion plans and these were sustained by a growing number of Filipinos who had been made aware of looking for a more secure investment option, who became their franchisees. Worth noting are Mang Inasal?s nationwide expansion and Potato Corner?s foray in the US.

Q: What were the biggest adjustments franchising companies had to do last year to weather the global crisis?
A: It was really more of the jitters in the first months that made things difficult for franchising, but once the fears subsided and consumer confidence went up again, things also began to improve.

Q: How do the franchising association and franchise companies see 2010?
A: The PFA is confident in the positive economic outlook for 2010. Being an election year helps since most people will be more optimistic. The incoming president will also be given its traditional honeymoon for 100 days, which means three months of continued optimism. After the honeymoon will be the ?ber? months, which will sustain the optimism until 2011.
A projected healthy inflow of remittances and robust public spending would further fuel consumption, the major growth driver of the domestic economy. With opportunities in tourism, business process outsourcing (BPOs) and agriculture as possible areas of growth which the franchising sector can explore, there is still room for growth in franchising.

Q: What would be the biggest threats and opportunities presented by 2010?
A: Threats. ?Pseudo-franchises?these scams continue to be the biggest bane in the sector because they destroy the good reputation of franchising and may result in an unwarranted regulation of franchising, and which could lead to restrictions in investments, concept development and others. Regulation should be maintained to self-regulation. Presently, PFA is a self-regulatory body, which sees to it that its members adhere to its Fair Franchising Standards (FFS).
Opportunities. ?Tourism? tourism in the Philippines will continue to pick up especially with the new tourism law. With this, franchising opportunities are expected to grow as well.?
The Bottom of the Pyramid? Since the Philippines has a high poverty incidence rate, it will be a good business decision to cater to the poor as what has been done in other countries like India and Pakistan. The tingi system is one adaptation pioneered by Philippine retailers. Another important development is the generics drugstores and a social enterprise which franchises sari-sari stores.

Q: Are there new trends in franchising?
A: Franchises that cater to BPOs will continue to perform well this year and in the coming years like convenience stores and quick service restaurants that are open 24 hours. A proof of this is the rising trend of 24/7 establishments in commercial and business districts. These 24/7 stores, however, are not only seen in CBDs but also in residential areas because more and more people now see convenience as a prime commodity. Somehow, people see it comforting when they can grab a bite to eat at any time of the day.
It would also be good to see restaurant chains that offer Southeast Asian favorites because we must start thinking beyond our borders. Though the Philippine market is already large at more than 90 million, just imagine the opportunities when we begin serving a 600 million market.
Another very important sector that we must develop is tourism. Franchises that offer services, such as health spas, beauty salons, medical/dental clinics, Internet cafes and hotels are facing good prospects. Speaking of tourism, the PFA believes it is high time that we develop an Asean budget hotel chain.
For those in the developmental sector, it would be good if they consider franchising as a means to reach to more beneficiaries through micro-franchising or social franchising.

Q: Are Filipinos investing more in franchising? Why or why not? And who are investing?
A: Interest in franchising as an investment option continues to grow as evidenced by the continuous growth of number of visitors in the Philippine International Franchise Conference and Expo (PIFCE). In 2009, we had 25,000 visitors, up by 12 percent in 2008. The profile of franchise investors continue to be professionals, retirees (especially early retirees), graduates who are not able to find a good, high-paying job and OFWs.
It is good to warn potential franchise investors, however, to do their homework when investing on a franchise because of the rise of franchise scams, whose proliferation can be attributed to the popularity of franchising.

Q: Is there anything you would like the next president to do to foster further growth in the industry?
A: 1. More support for the sector. In Malaysia, the franchising sector is heavily supported by the government especially in terms of overseas expansion, which paved the way for opening of Malaysian brands?like Secret Recipe, Marrybrown Chicken, Smart Reader in the foreign markets.
This is ironic because the Philippines is the Southeast Asian leader in franchise concept development; but because of lack of support, we are not able to export our brands as fast as our Asean neighbors.
2. More business-friendly environment. Because of its strategic position, reinforced by a well-educated, English-speaking workforce gifted with a quick smile, the Philippines has the potential to be the franchise hub of Asia, where international franchises can establish their headquarters for their regional operations. But if we look at the Philippines? standing in competitiveness report, we are habitual mediocre players. That is probably why international franchises pick Singapore as their base of operations even if the market there is very small.
3. More incentives, less regulation. One reason why we always lag in international competitiveness reports is that business is much too regulated because foreign investors would prefer more leeway in running their business?from registering their business to hiring or firing their workers.
Because of too much regulation, Philippine labor productivity is ranked way below our Asean neighbor, which is really a disservice to the Filipino worker and manager who is considered to be among the best in the world.